fpdteam, Author at Bennetts Accountancy

Updating your tax return

13th July 2023 by fpdteam

There are special rules to follow if you have submitted a Self-Assessment return and subsequently realise you need to change it. For example, this can happen if you made a mistake like entering a number incorrectly or missed information from the return.

If you filed your return online, you could amend your return online as follows:

Sign in to your personal tax account using your Government Gateway user ID and password.
From ‘Your tax account’, choose ’Self-Assessment account’ (if you do not see this, skip this step).
Choose ‘More Self-Assessment details’.
Choose ‘At a glance’ from the left-hand menu.
Choose ‘Tax Return options’.
Choose the tax year for the year you want to amend.
Go into the tax return, make the corrections and file it again.

You must wait three days (72 hours) after filing before updating your return. If you opted to file your return on paper, you will need to download a new return and fill in the pages that you wish to change and write ‘amendment’ on each page. You must also include your name and Unique Taxpayer Reference on each page and then send the corrected pages to the address where you sent your original return.

If you used commercial software to submit your Self-Assessment return, then you should contact your software provider in the first instance. If your software provide cannot help, then you should contact HMRC.

The deadline for making changes for the 2021-22 tax year using any of the methods outlined above is 31 January 2024. If you have missed the deadline, you will need to write to HMRC instead. For example, if you found a mistake in your 2020-21 return after 31 January 2023. In the letter, you will need to say which tax year you are correcting, why you think you have paid too much or too little tax and by how much. You can claim a refund up to four years after the end of the tax year it relates to.

Source:HM Revenue & Customs| 10-07-2023

Cannot pay your tax on time?

13th July 2023 by fpdteam

The second payment on account for Self-Assessment taxpayers for the 2022-23 tax year is due on 31 July 2023. Taxpayers are usually required to pay their Income Tax liabilities in three instalments each year. The first payment was due on 31 January 2023. The final balancing payment of tax will be due on 31 January 2024.

If you are having trouble paying your tax on time you may be eligible to receive support with your tax affairs. An online payment plan for Self-Assessment tax bills can be used to set up instalment arrangements for paying tax liabilities up to £30,000.

Taxpayers that want to use the online option must have filed their latest tax return within 60 days of the payment deadline and intend to pay their debt within the following 12 months or less. Taxpayers that qualify for a Time to Pay arrangement using the self-serve Time to Pay facility online, can do so without speaking to an HMRC adviser.

Taxpayers with Self-Assessment tax payments that do not meet the above requirements need to contact HMRC to formally request a Time To Pay arrangement. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

HMRC will only offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full but will be able to pay in the future. If HMRC do not think that more time will help, they can require immediate payment of a tax bill and start enforcement action if no payment is forthcoming.

Source:HM Revenue & Customs| 10-07-2023

Pension Credits

13th July 2023 by fpdteam

Pension Credits can provide extra income to those over State Pension age and on a low income. The credits were first introduced in 2003 to help keep retired people out of poverty. There are two main parts to Pension Credit.

The first part is referred to as the ‘Guarantee Credit’.

Pension Credit can top up:

your weekly income to £201.05 if you are single; and
your joint weekly income to £306.85 if you have a partner.

If your income is higher, you might still be eligible for Pension Credit if you have a disability, you care for someone, you have savings or you have housing costs. Not all benefits are counted as income.

The second part of Pension Credit is referred to as the ‘Savings Credit’.

You could get the ‘Savings Credit’ part of Pension Credit if both of the following apply:

you reached State Pension age before 6 April 2016; and
you saved for retirement, for example a personal or workplace pension.

Recipients get up to £15.94 Savings Credit a week if they are single and up to £17.84 a week if they have a partner.

It is possible to qualify for one or both parts of the Pension Credit.

Recipients of Pension Credits will automatically get cold weather payments and are also eligible to apply for a free TV licence if they are aged 75 or over and to assist with NHS costs if they receive the ‘Guarantee Credit’ part of Pension Credit.

Source:HM Revenue & Customs| 10-07-2023

Getting a SA302 tax calculation

13th July 2023 by fpdteam

The SA302 tax calculation and tax year overview documents are commonly used as evidence of income for loan or mortgage purposes for the self-employed. The forms have become more widely used since the mortgage rules have required evidence of income for the self-employed. The SA302 provides this evidence for the last four years Self-Assessment tax returns.

The SA302 shows the breakdown of the income returned on the taxpayer’s tax return, including commercial versions. The tax year overview confirms the tax due from the return submitted to HMRC and shows any payments made, cross referencing the Tax Calculation with HMRC records.

Self-Assessment taxpayers can use HMRC’s online service to request an SA302 tax calculation. It takes 72 hours after an online tax return has been submitted before the documents are available to print.

Most lenders will accept a SA302 printed from online accounts or from the commercial software used to submit returns. HMRC has been working with the Council of Mortgage Lenders and their members to increase the number of lenders who will accept self-serve copies.

Source:HM Government| 10-07-2023

Tax on property you inherit

13th July 2023 by fpdteam

If you inherit property, you are usually not liable to pay tax on the inheritance you receive. This is because any Inheritance Tax (IHT) due should be paid out of the deceased’s estate before any cash or assets are distributed to the estate beneficiaries.

The rate of IHT currently payable is 40% on death and 20% on lifetime gifts. IHT is payable at a reduced rate on some assets if an individual leaves 10% or more of the 'net value' of their estate to a charity.

If you inherit a property, you are generally not liable for Stamp Duty, Income Tax or Capital Gains Tax and HMRC would make contact if you had IHT to pay.

If you receive an inheritance, you will be liable to Income Tax on any profit or gains received or earned after the inheritance. For example, Capital Gains Tax (CGT) on any increase in property value if you dispose of the property after the date of inheritance or tax on any rental income received. If inheriting a property means you then own two properties, you must tell HMRC which property is your main home within two years. There are special rules if the property is held in trust.

Source:HM Revenue & Customs| 10-07-2023

Alcohol duty changes

13th July 2023 by fpdteam

Changes in the way alcohol is taxed came into effect on 1 August 2023. The new system of calculating alcohol duty for all alcoholic drinks will be made using standardised tax bands based on alcohol by volume (ABV). This replaces the previous alcohol duty system, which consisted of four separate taxes covering beer, cider, spirits, wine and made-wine.

These changes are expected to make the system fairer and encourage more new products to enter the market. The new system sees the creation of six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

There is also more help for the hospitality industry with an increase in the draught relief duty differential. This will reduce alcohol duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants. These changes also took effect from 1 August 2023 and mean that individuals who drink draught products in on-trade venues (such as pubs) will pay less tax than on the equivalent non-draught product in off-trade venues (such as supermarkets).

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for eighteen months from 1 August 2023 until 1 February 2025.

Source:HM Revenue & Customs| 10-07-2023

Ideas for increasing your cash flow

11th July 2023 by fpdteam

Business owners are not exempt from the effects of inflation, but unlike waged individuals, they may have more options to increase cash flow. Here’s a few ideas you may like to consider:

If you have slow-moving or dormant stock sitting on your storage racks, consider a sale. Anything you can convert into cash will have a positive impact on cashflow.
Are staff fully utilised? If not, could you offer short-term placements via employment agencies? Failing this option, do you need to consider redundancies?
Do you have unused storage or production space that you could rent for short periods?
Are your company vehicles fully utilised? Could they be hired to other firms on short-term hire contracts?

Wage earners will have other options to increase their monthly cash flow. For example:

Taking on a second job, albeit part-time.
Make a list of all those unwanted items languishing, unused, in your loft, outhouse or storage spaces and consider selling on E-Bay or similar platform.
Could you let out your drive 9am to 5pm to workers unable to find regular parking spots in your area?
Do you have underutilised equipment that you could hire out?

And earning £1,000 or under in a tax year from either renting out part of your home or selling/hiring under-utilised assets is tax free.

And finally, if you have spare rooms in your home, you may be able to rent these tax-free as long as annual rents received do not exceed £7,500 and you are resident in the same building.

If you would like to expand on any of these ideas, be happy to discuss your options. Please call.

Source:Other| 10-07-2023

How copyright protects your work

6th July 2023 by fpdteam

You get copyright protection automatically – you don’t have to apply or pay a fee. There isn’t a register of copyright works in the UK.

You automatically get copyright protection when you create:

original literary, dramatic, musical and artistic work, including illustration and photography
original non-literary written work, such as software, web content and databases
sound and music recordings
film and television recordings
broadcasts
the layout of published editions of written, dramatic and musical works

You can mark your work with the copyright symbol (©), your name and the year of creation. Whether you mark the work or not doesn’t affect the level of protection you have.

copying your work
distributing copies of it, whether free of charge or for sale
renting or lending copies of your work
performing, showing or playing your work in public
making an adaptation of your work
putting it on the internet

Source:Other| 05-07-2023

Changes to Scottish Bankruptcy law

6th July 2023 by fpdteam

The bankruptcy process applies to individuals living in England, Wales or Northern Ireland. There is a separate bankruptcy process sometimes known as sequestration in Scotland. Bankruptcy is a form of insolvency and is normally suitable for those who are unable to pay back their debts in a reasonable time. Most applications for bankruptcy are made by the individuals in debt, but it is also possible for a person to be made bankrupt.

A new Scottish Bill is currently making its way through the Scottish Parliament and will make the following changes to the Scottish bankruptcy laws:

Give powers to the Scottish Ministers to establish a pause on debt recovery action against people who are in debt and who also have a mental illness.
Make technical changes to the law on bankruptcy.
Update the law on diligence. Diligence is the legal processes that creditors can take to enforce repayment of overdue debts.

These changes are part of a wide-ranging policy review of Scotland’s statutory debt solutions, specifically moratorium protection, bankruptcy, Protected Trust Deeds (PTDs) and the Debt Arrangement Scheme that was launched back in 2019. Part of the work was delayed as a result of the Coronavirus pandemic. The Bill aims to help and improve the lives of people who are struggling with problem debt and serious mental health issues.

Source:The Scottish Government| 03-07-2023

Working out capital gains

6th July 2023 by fpdteam

As with the Income Tax personal allowances, taxpayers have an annual exempt amount for Capital Gains Tax (CGT) which is forfeited if not used. The annual exemption for individuals in 2023-24 was reduced to £6,000 (from £12,300) and is set to be further halved to £3,000 from April 2024. A married couple each have a separate exemption. This also applies to civil partners who are treated in the same way as married couples for CGT purposes.

To work out capital gains for a tax year, you should take the following steps:

Work out the gain for each asset (or your share of an asset if it’s jointly owned). Do this for the personal possessions, shares or investments, UK property or business assets you have disposed of in the tax year.
Add together the gains from each asset.
Deduct any allowable losses.

If the total gains are less than the relevant annual exempt amount, then no CGT is due. Taxpayers still need to report gains in their tax return if both of the following apply. The total amount they sold the assets for was more than 4 times their allowance and they are registered for Self-Assessment.

Married couples and civil partners should ensure that assets sold at a gain are either jointly owned or that each partner utilises their annual exempt amount wherever possible. Any unused part of the annual exempt amount cannot be carried forward and is forfeited if unused in the current tax year.

CGT is usually charged at a simple flat rate of 20%. If you only pay basic rate tax and make a small capital gain, they may be subject to a reduced rate of CGT of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT. A higher rate of CGT (8% supplement) applies to gains on the disposal of chargeable residential property.

If you have sold or are planning to sell any assets in the current tax year it is important to ensure that you take full advantage of the annual CGT exemption and arrange your affairs to ensure the optimum CGT position. For example, capital losses are deducted from gains before net gains are calculated. Crystallising a loss that will waste the annual exemption should therefore be avoided.

Source:HM Revenue & Customs| 03-07-2023